Rio And Rusal Clash Over Joint Venture
The Age
Thursday May 1, 2008
SIMMERING tension between Rio Tinto and Russian metals billionaire Oleg Deripaska over the multibillion-dollar expansion potential of their Queensland alumina joint venture at Gladstone in Queensland (QAL) has boiled over.
Bad blood between Rio and Mr Deripaska's Rusal was created last year when Rusal lobbied hard with antitrust regulators over Rio's $US38 billion acquisition of Canadian aluminium group Alcan.According to the chief executive of Rio's Rio Tinto Alcan (RTA) unit and former Alcan chief, Dick Evans, Rusal lobbied "vigorously" against the Alcan deal in the hope it could win a divestment of Rio's 80% QAL stake, allowing Rusal to march to 100% and cement its position as the world's biggest alumina producer ahead of RTA.But having failed in that quest, Rusal has been left to urge RTA to go for a 2 million tonnes a year expansion at QAL, while RTA, as the senior partner, is looking for a 1 million tonnes expansion, with a feasibility study into the smaller "de-bottlenecking" project expected to start inside 12 months."Their (Rusal's) challenge is that they have a lot of alumina," Mr Evans said. "That's the good news. The bad news is that it's almost all in the wrong location and it's almost all in the third and fourth-cost quartile."So they would just love to expand available capacity such as we have here." Mr Evans said RTA would have to "look very hard" at going beyond a "de-bottlenecking" project at QAL because it might be better off having a third expansion of its Yarwun refinery, also in Queensland."And that might be different for Rusal because they might not have the same kind of options we have. In fact, they don't," he said. "So we would look at what is best for our shareholders, not what is best for their shareholders."
© 2008 The Age
